By Alun John

HONG KONG, (Reuters) – The dollar was close to a four and a half-year high against the yen after Jerome Powell, Federal Reserve Chair, was reappointed for a second term. This has encouraged bets about higher U.S. rates of interest.

The greenback’s current price is 114.8 yen, which is close to its peak last week of 114.97. It has risen 0.77% since Monday.

Japanese currency reacts to U.S. Treasury note movements. Two-year U.S. Treasury yields increased 8.5 basis points Monday, to reach their highest level since March 2020. The last time they yielded was 0.5924%. [US/]

U.S. President Joe Biden chose Powell to replace Lael Brainard (whom markets perceive as moredovish), though Brainard will still be Fed vice chairman.

Market expectations were reinforced by the news that rate increases could be possible next year, when the central banks stops tapering its emergency bond purchasing programme.

Market perceptions about the pace at which central banks around the world reduce stimulus for pandemics and increase rates have largely influenced currency markets.

“Chair Powell’s nomination for a second term will leave markets comfortable pricing in Fed lift-off from July next year,” said analysts at Westpac in a note. “At most three Fed officials now have openly discussed the possibility of speeding up tapering.”

They added that virus suppression measures were being implemented again in Europe, creating a striking contrast.

After losing 2.8% in March, the euro remained stuck at $1.124. That’s a 16-month low.

Common currency was hit by the negative tone from the European Central Bank, and then a rebound in COVID-19 case in Europe. This forced Austria to re-enter lockdown Monday. Germany also considered tightening restrictions.

The soft sterling was also compared to the rampant dollar, with one pound trading at $1.340.

A strong dollar and slightly lower oil prices had a negative impact on commodity currencies.

The Australian dollar was also being dragged along by the perceptions of a dovish Reserve Bank of Australia. It reached $0.7228 at its lowest level since October.

This month, the Canadian dollar’s decline continued. On November 2, the dollar increased 2.5%, and one dollar stood at 1.2692.

After hitting $69,000 this month, $56,784 was still a low number.

In a note, analysts from cryptoexchange OKEX stated that “many traders will watch to see if this falls to as low as $52,000,” which would indicate where the leading cryptocurrency market finds buyers.